The abrupt resignation of Ukraine's economy minister, followed by several of his deputies, over allegations of corruption has jeopardized Kiev's relations with
its Western backers, threatening vital loan aid, politicians said on Thursday.

Aivaras Abromavicius quit on Wednesday, saying he would not become a "puppet" for corrupt vested interests, and accused a close ally of President Petro Poroshenko of trying to siphon off state funds.

Parliamentary Speaker Volodymyr Groysman said Ukraine was entering a "deep political crisis" and called for a government reshuffle, while several of Abromavicius's deputies resigned overnight. One compared working at the ministry to suffering a "death by a thousand cuts."

Abromavicius's departure shone an uncomfortable spotlight on Ukraine's efforts to reform its economy and tackle corruption, which its Western-backed government pledged to do when it came to power after the Maidan protests in the winter of 2013/2014.

"What happened is a catastrophe for the whole country," Leonid Yemets, a lawmaker with People's Front that belongs to Prime Minister Arseny Yatseniuk, told Reuters.

"Think about it: how can we now talk with our partners in the West, with our donors, after the minister comes out and says that the deputy head of the president's faction is corrupt. Who will want to speak with us after this?"

Abromavicius accused Ihor Kononenko of lobbying to get his people appointed as heads of state companies, culminating in an attempt to appoint one of his people as Abromavicius's deputy.

Kononenko denied the accusations as "completely absurd," and said Abromavicius was trying to shift blame for his own failures in running the ministry. The prime minister later said there was a campaign to discredit his government, and accused Abromavicius of "running from the field of battle."

Aid money

Ukraine relies on aid money from its Western backers, including the International Monetary Fund, the United States and the European Union, to stay afloat.

Ukraine's economy shrank by more than 10 percent last year, dragged down by its war against pro-Russian separatists, who have taken control over a swathe of the country's eastern industrial heartland.

The government's patchy performance in introducing reforms, coupled with domestic political squabbles, have already delayed the disbursement of new aid money.

"Aivaras was a favorite of our Western partners and his decision very negatively affects our relations with them," Yegor Sobolev, also a lawmaker in the ruling four-party coalition, told Reuters.

"The fact that there is still corruption in the country wasn't news to the West, but now it is in the public sphere and now Western politicians must explain to their citizens why they have to help such a country as Ukraine."

Ukraine is hoping the IMF will soon decide to disburse a third tranche of loans — worth $1.7 billion — which has been delayed since October.

"The consequences of Aivaras's announcement are hard to predict, but it's clear that they are very negative," said a lawmaker from Poroshenko's faction, who declined to be named. "It could lead to the postponement of the IMF tranche."

There has been no comment so far from the IMF about the resignation. The U.S. State Department declined to comment on Wednesday about what impact it could have. A statement from Western diplomats, including those from Germany and the United States, said they were "deeply disappointed."